Pandora cuts outlook amid fewer active listeners

EzequielMinaya

Web-radio service Pandora Media Inc. lowered its annual guidance as the number of active listeners edged down while expenses climbed, helping to cause the company to fall short of revenue and profit outlooks.

Shares of Pandora, up 1.9% over the past year, sank 5.4% to $11.52 in after-hours trading Tuesday as the company's third-quarter results fell below expectations.

Pandora's active listeners were 77.9 million in the third quarter, compared with 78.1 million from the same period last year. Total operating expenses for the September quarter rose to $191.9 million from $164.7 million a year earlier.

For the year, Pandora Media now expects revenue to land between $1.35 billion and $1.37 billion, down from a previous range of $1.39 billion and $1.41 billion. Analysts surveyed by Thomson Reuters projected $1.4 billion.

Pandora Media sees revenue for the current quarter between $362 million and $374 million, while analysts forecast $391.8 million.

The company also estimates sharper adjusted losses before interest, tax, depreciation and amortization -- now projecting a range of $128 million and $140 million for the year, wider than its previous estimate for losses between $50 million and $70 million.

Over all, for the third quarter, Pandora narrowed its loss to $61.5 million, or 27 cents a share, from a loss of $84.9 million, or 40 cents a share, a year earlier. The losses were narrowed in part because of new revenue from its ticketing service.

Excluding certain items, losses were 7 cents a share, compared with a profit of 11 cents a year earlier.

Revenue climbed 13% to $351.9 million. Analysts surveyed by Thomson Reuters expected a per-share loss of 6 cents and revenue of $366.33 million. The company had projected revenue between $360 million and $370 million.

Pandora's competitors include Spotify AB and Apple Music. The company also has expanded from its core business with the acquisition of ticketing and digital marketing company Ticketfly Inc. for about $450 million.

In the quarter, subscription and other revenue edged down 1% to $56.1 million. Advertising sales, the bulk of revenue, rose 7% to $273.7 million. Ticketing service revenue added $22 million.

Last month, Pandora rolled out a new version of its ad-free internet radio service. Pandora Plus, as the new tier is called, marks the 16-year-old company's first offering for which it licensed music directly from the major record companies.

Until now, Pandora has been using compulsory licenses issued by the government which have allowed it to pay rates determined by federal judges.

Pandora also is planning to launch a separate $10-a-month on-demand tier later this year, the company said, while it has been seeking the rights to launch all three levels of service in more overseas markets, according to people familiar with the matter. Foreign expansion could help jump-start growth for Pandora, which has seen its user growth stagnate in recent years.

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